nep-age New Economics Papers
on Economics of Ageing
Issue of 2008‒03‒01
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Policy Challenges of Population Aging in Ireland By Dennis P. J. Botman; Dora M. Iakova
  2. Population ageing and public pension reforms in a small open economy. By Christiane Nickel; Philipp Rother; Angeliki Theophilopoulou
  3. The Effects of Early Retirement on Youth Unemployment: The Case of Belgium By Alain Jousten; Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
  4. Happiness over the life cycle: exploring age-specific preferences By Lelkes, Orsolya

  1. By: Dennis P. J. Botman; Dora M. Iakova
    Abstract: The projected rise in age-related government spending as a share of GDP in Ireland over the next forty years is among the highest in the euro area. In the absence of reforms, public debt will increase to unsustainable levels. This paper uses the IMF's Global Fiscal Model to compare the macroeconomic effects of different fiscal strategies to accommodate the rise in age-related spending. The simulations suggest that adopting a package of measures, including an increase in the retirement age, broadening the tax base, and raising indirect taxes, would be a more growth-friendly strategy than relying exclusively on raising the social security contribution rate.
    Keywords: Working Paper , Pension regulations , Ireland , Aging , Government expenditures , Public debt , Fiscal policy , Tax bases , Economic models ,
    Date: 2007–10–29
  2. By: Christiane Nickel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Philipp Rother (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Angeliki Theophilopoulou (University of London, Birkbeck College, School of Economics, Mathematics and Statistics, Malet Street, WC1E 7HX London, UK.)
    Abstract: This paper aims to address the issue of public pension reforms under demographic ageing that is likely to occur in Europe over the next 50 years. Three possible scenarios are analysed in a Blanchard OLG framework. These include: i) a decrease both in public pensions and the lump sum labour income tax, ii) a decrease both in public pensions and the distortionary corporate tax, iii) an increase in the retirement age. The analysis focuses on the effects of these fiscal policies on key economic variables such as consumption, private and public debt, output and wages. Quantitative experiments assess the impact of different fiscal policies in terms of public debt sustainability but most importantly suggest policies that smooth the transition of the economy to the new equilibrium. The main results suggest that the adverse effects of pension reforms on consumption are moderated when they are accompanied by appropriate taxation policies. In particular, when the tax response is rapid most of the adverse movement in consumption is avoided while public and national debt reach lower equilibrium levels. JEL Classification: E6, H3, J1, H55.
    Keywords: Ageing, Pension Reforms, Taxation, Overlapping Generations.
    Date: 2008–02
  3. By: Alain Jousten; Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
    Abstract: In this paper, we describe the changes of (early) retirement programs over time and study the link between trends in elderly labor force participation and youth unemployment. From a theoretical point of view, there is no convincing argument that the idea of a lump-of-labor should hold. Our empirical results comfort this finding, and indicate a very weak link, if any, between elderly retirement and activity among the young and the prime-age populations.
    Keywords: Unemployment , Belgium , Labor supply , Pensions ,
    Date: 2008–02–04
  4. By: Lelkes, Orsolya
    Abstract: Existing evidence suggests a U-shaped relationship between age and life satisfaction, when controlling for income and education and other personal characteristics. On the other hand, there is no clear pattern between old age and happiness without the use of controls. Thus, it is not ageing as such, which results declining happiness, but rather the circumstances which are associated with ageing. Which of these circumstances could be averted? Are the preferences of the elderly are similar to others? The paper aims to explore these issues, using the European Social Survey. The results imply that the varying level of life satisfaction during the life cycle may be explained partly by changing preferences (by the decreasing importance of work, the increasing importance of religion, and the declining disutility of being single), and partly by changing circumstances. While changing preferences seem to increase well-being, changing circumstances seem to decrease it. Exceptions are the few positive changes in circumstances, which are likely to contribute to higher well-being, include increasing religiosity and relatively low pensioners’ poverty across the 21 European countries examined here. Old days thus are happy above all due to changing priorities in life.
    Keywords: Life Satisfaction; Age; Preferences
    JEL: J14 I31 Z10
    Date: 2008–02–20

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